Digital Music News - Bandcamp's VC: Investing In Music Is "a Little Like Vietnam..."

Bandcamp's VC: Investing In Music Is "a Little Like Vietnam..."

Saturday, February 26, 2011
by presnikoff

You can put money into a music startup, but can you get it out? Well, a lot more investors are getting in - in a major way - though this is a difficult space to read right now. On one hand, extreme funding is happening around Rdio, Spotify, X5, and Pandora, and lots of fresh cash is coming in. On the other hand, major segments of the investment community have sworn off the sector, based on the quagmire we know all too well. "No one gets out of this space alive," one burnt VC recently told Digital Music News.

So what's going on? It seems confusing on the surface, though outside of a few gargantuan funding rounds, the environment remains cautious. "Money is coming off of the sidelines, and 2009 may have been the bottom," explained John Boyle, CEO of the BAM Group recently at Digital Music Forum East (Boyle just exited Hello Music). "But valuations are lower, return expectations are lower, and bets are more diversified."

But what about the burned investors of yore, the ones crushed by licensing and freebie-loving music fans? Oh, they still exist, and some are creeping back in.

That is, with appropriate levels of fear and trepidation. Just ask Tony Conrad of True Ventures, whose portfolio now includes Bandcamp. "There are certain spaces where we're not as excited, like music," Conrad recently told TechCrunch. "A lot of us were part of the first wave, [and] music's a little like Vietnam... I'm not sure I want to go back in."

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Comments (5)

Jonathan Jaeger Saturday, February 26, 2011

He also discusses this some with the same analogy on This Week in Startups. The whole interview is longer and more engaging if you want to hear more from Tony Conrad

Tony Conrad Saturday, February 26, 2011

Just wanted to clarify that despite my Vietnam reference, we are seriously thrilled to have invested in Bandcamp. Founder Ethan Diamond is a proven star and he and his team are killing it. Bandcamp is one of True Ventures fastest growing portfolio companies and it underscores how backing talented founders is so much more important than picking the space or idea. Bandcamp, along with a number of other fanstatic music companies like Pandora, Spotify, etc, is playing a key role in creating new distribution and business model opportunities for artists in the fast evolving music space. We are truly lucky to be able to support their vision. I hope that clarifies my comment.

trevor Sunday, February 27, 2011

Hi Tony,

I understand that you're backing the founder more than the space, but I still see many fundamental flaws with this space that could be very hard to overcome. Can you respond to the issues of DIY startups, especially:

- it's very very crowded as a space

- bands typically don't pay for more expensive features, and

- there is not really a model that scales here?

Thanks, I appreciate your consideration of these questions.

@znakit Monday, February 28, 2011

Gregory Golebiewski

@

Anything on Spotify? Or, how stupid it is to invest in music start-ups?

@indabamusic Tuesday, March 01, 2011

indabamusic

Uh oh..

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